Bitcoin Price,Explained.

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How did Bitcoin price develop?
Bitcoin price has its own wild road.
In 2009, the year Bitcoin was created, nobody could
have thought it would gain such popularity. The initial
price was about $0.001. Over the next five years there
were no significant events, so the price rose slowly
with little fluctuations. In 2013, Bitcoin attracted a lot
of attention because of the Cyprus banking crisis. In
November 2013, the Chinese started to buy BTC in
large quantities and the price increased by 1000
percent. However, it didn’t last long. In February 2014,
there was a DDoS attack on the servers of the
exchange Mt. Gox. At that time, it controlled about 60
percent of Bitcoin transactions. This occasion struck
Bitcoin hard and the price fell by 40 percent.
Throughout the year, until January 2015, the price
continued to fall down. During 2015, Bitcoin gained
popularity slowly but firmly and during that year, the
price began to rise little by little. Since May 2016,
Bitcoin has earned the trust of more and more people,
and its price has continued to rise. In June 2017, the
market saw a dramatic fall and the price decreased by
14 percent. Nowadays, Bitcoin is taking back its
positions.
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What factors influence Bitcoin price?
There are a number of factors that impact Bitcoin price
over the course of time.
Market demand and supply - This factor is major.
Nowadays, Bitcoin does not have any physical
equivalent in the real world, so BTC are sold on
exchanges. The main principle of economics says that
if people buy a currency, its price rises and if people
sell the currency, its price falls. Bitcoin is no
exception. In the fall of 2013, the price went up by 10
times as a result of Chinese demand.
Total amount of Bitcoins and Bitcoin holders - The total
amount of Bitcoins is 21 mln, but they are produced
with time.
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Currently, there are about 16 mln BTC and more than
14 mln people have wallets with BTC. This number is
growing rapidly and since the number of Bitcoins is
fixed, the price will continue to rise.
News in mass media - There’s always a human factor
involved - i.e. the way people can react to news. For
instance, remember the 25 percent price fall after Ross
Ulbricht’s arrest or the new price record in anticipation
of the Winklevoss’ ETF hearing.
Technical issues - Bitcoin has an open source code, so
everyone can examine it. New updates for fixing some
bugs and weak points in code can give an impetus for
price growth. Meanwhile, successful account hacks or
server attacks can bring down the exchange rate. In
August 2016, some hackers discovered a security
problem in Bitfinex and the price subsequently fell.
Political and economic events worldwide - In the age of
globalization, decisions in just one country can have an
influence on the entire world - i.e. accepting Bitcoin as
a means of payment in Japan .
High volatility - Volatility is the degree of trading price
variation over time. Volatility refers to the amount of
uncertainty or risk in a security's value. Higher volatility
means that a security's value can potentially be spread
out over a larger range of values. In other words, the
price of the security can change dramatically over a
short time period in either direction. The volatility of
Bitcoin is about 10 percent right now, but it is going
down.

What is the backing of Bitcoin?
Bitcoin does not have any physical backing.
It means that it’s not backed by any precious metals
or international agreements. Nevertheless, it has all the
characters of money such as:
Uniformity - All Bitcoins are equal. Nobody can
distinguish one Bitcoin from another. Each BTC has the
same value and price.
Divisibility - Each Bitcoin can be divided into smaller
parts.
Portability - Individuals are able to carry money with
them and transfer it easily to other individuals.
Longevity - After the issue, Bitcoin will exist for an
indefinite time in the system. It will not disappear at
some moment.
Recognition - Everyone can easily distinguish Bitcoin
from other cryptocurrencies.
Security - Bitcoin is protected from falsification, theft
and changes in the information of transactions.
The main difference between BTC and real-world
currencies is that all the features above are
guaranteed by methods, algorithms and protocols
proved by mathematics.

What are the most significant Bitcoin price
fluctuations?
There have been some price swings in the history of
Bitcoin.
Caused by technical reasons
In February 2011, the exchange Mt. Gox was found,
which allowed people to exchange USD to Bitcoins.
Consequently, the price rose from $0.05 to over $1.
In February 2014, Mt. Gox declared a DDoS attack on
its servers. At that moment, Mt. Gox controlled about
60 percent of Bitcoin transactions. As a result, the
price went down by 30 percent.
Influenced by international events
Between October-November 2013, organizations all
over the world announced that they had started to
accept payments in BTC. The Chinese started to buy
Bitcoins en masse and, unsurprisingly, the price rose
from $120 to $1,150.
In December 2013, the People’s Bank of China forbade
payments in BTC, which saw the price fall to $500.
Influenced by mass media
In April 2010, an updated version of the source code
was published . After that article, the price increased 10
times.
In April 2011, Time magazine published an article about
Bitcoin whereby the author talked about the future of
the cryptocurrency. Soon after, Bitcoin price grew from
$10 to $30.

What will happen with Bitcoin price?
It’s hard to predict something for sure.
Any currency can become subject to collapse. There
are some notoriously known devalued currencies such
as the German Papiermark or the Zimbabwean Dollar .
In a short period of time, their prices fell almost to
zero. They went out of use since the prices of goods
and services increased by leaps and bounds.
In theory, technical issues and limitations, code
problems, political events and decisions and other
cryptocurrencies are potential “deal breakers” for
Bitcoin. Nevertheless, currently, there are no
prerequisites for devaluation.
Many representatives of the crypto community and
investors believe that the current Bitcoin growth is
stable and not at all a “bubble.”
Bitcoin is rather young, approximately 10 years, and it
has enormous potential for growth.
It is hard to predict Bitcoin price movement so to know
more about current and upcoming trends, it might be a
good idea to follow the market and stay updated on the
news.

Article Source:https://cointelegraph.com/explained/bitcoin-price-explained

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